Microsoft Cuts 4,800 Jobs, Xbox Division Reduces Workforce by 20%
"Game On" is The Fly's weekly recap of the stories powering up or beating down video game stocks.NEW RELEASES:This week's most notable new game release is Electronic Arts'football sim "EA Sports College Football 27," which releases for PC, PlayStation 5, and Xbox Series X/Son July 9. Also out this week is Ubisoft'saction-adventure title "Assassin's Creed Black Flag Resynced," a remake of 2013's "Assassin's Creed IV: Black Flag." The remake launches on July 9 for PC, PS5, and Xbox Series X/S.XBOX LAYOFFS:Microsoft is eliminating 4,800 jobs, representing 2.1% of its workforce, with the company's Xbox division losing about one-fifth of its staff, reported CNBC's Jordan Novet, citing a message to employees from Amy Coleman, Microsoft's Chief People Officer. The Xbox division is cutting 3,200 people through fiscal year 2027, Xbox CEO Asha Sharma wrote in an email to employees, noting that 1,600 roles would be eliminated on Monday. The cuts amount to 20% of Xbox employees leaving, according to a person familiar with the matter, the report noted. As part of Monday's announced changes, four gaming studios will be spun out of Microsoft, Coleman is quoted as having said as well.As part of plans to lay off staff, Xbox will also from five development studios, Bloomberg's Jason Schreier reports. "South of Midnight" studio Compulsion Games and "Psychonauts" developer Double Fine will both become independent companies, while "Hellblade" developer Ninja Theory and "State of Decay" maker Undead Labs will be sold to other companies, though such details have not been revealed, Schreier notes. Arkane Lyon, meanwhile, will enter into a consultation process in France to review its options, Schreier adds.PLAYSTATION GOES DISCLESS:Sid Shuman, Senior Director, Sony Interactive Entertainment Content Communications, said in a blog post last week: "As consumer preferences and the broader entertainment industry continue to shift away from physical discs to digital, physical game disc production for all new games releasing on PlayStation consoles will be discontinued starting January 2028. Following this date, new games will be available on PlayStation Store and at retailers in digital formats only. This transition has no impact on games that already released, or will be releasing, prior to January 2028 in disc format. This is a natural direction for Sony Interactive Entertainment to adapt to consumer trends as the general preference for digital media significantly outpaces physical discs. This transition will enable us to align more closely with how most of our community prefers to access and play games today. We'll continue to prioritize our resources to drive innovation in how players can access games and provide choices as to where players prefer to purchase new games, whether that's at retailers or PlayStation Store. We remain committed to delivering a world-class gaming experience to our fans and we thank you for your continued support."Following the news, several analysts told Kotaku that Sony's PlayStation 6 and Microsoft's Project Helix, the next-generation consoles from both companies which have not been officially unveiled yet, will almost certainly be digital-only devices, and will likely launch in 2028. Circana senior director Mat Piscatella told Kotaku that it is "safe to now assume that both PlayStation 6 and Project Helix will be digital only devices," though he noted that Nintendowill continue producing physical cartridges at least through the end of the Switch 2's life cycle. "Physical media in video games will only last so long as the console manufacturers allow it to, and we're now one step closer to its death," Piscatella added. "It's a sad day in the world of video games." Meanwhile, Dr. Serkan Toto of Kantan Games agreed with Piscatella on Nintendo's releases, and also told Kotaku that Xbox could follow PlayStation's lead in moving away from discs entirely. Daniel Ahmad, director of research & insights with Niko Partners, also told Kotaku, "This move guarantees that the PlayStation 6 will ship without a disc drive and Sony is embracing an all digital future. I think many expected Microsoft to make this announcement first, but Sony has beaten them to the punch."Meanwhile, Circana's Piscatella said on Bluesky that, through May 2026, over 25% of PlayStation 5 hardware units sold in the U.S. life-to-date are digital systems. The life-to-date U.S. attach rate of the add-on Disc Drive to those digital systems is over 5%, he noted. The news comes a day after Sony's PlayStation business said it would end physical disc production for new games starting in January 2028.NINTENDO HARDWARE:Nintendo said that, starting summer 2026, in preparation for upcoming changes in European battery regulations coming into effect in mid-February 2027, selected Nintendo products in Europe will begin to be replaced on a rolling basis by revisions that contain a user-replaceable battery. There is no difference in functionality between current products and revised products containing user-replaceable batteries. The first revised products are expected to become available from summer 2026, with additional products becoming available in autumn, winter, and early 2027. Due to a variety of factors, revised products may not become available in all European countries simultaneously. Updated products include Nintendo Switch 2 consoles, Joy-Con 2 controllers, Nintendo Switch 2 Pro Controller, Nintendo 64 Controller for Nintendo Switch, and Nintendo GameCube Controller for Nintendo Switch 2.Additionally, Nintendo said that the Nintendo Switch, Nintendo Switch Lite, and Nintendo Switch - OLED Model will all continue to be manufactured in 2026, and should be widely available in Europe all year. From mid-February 2027, almost ten years after Nintendo Switch launched in March 2017, Nintendo will no longer sell to retailers hardware in the Nintendo Switch family of systems - specifically Nintendo Switch, Nintendo Switch Lite and Nintendo Switch - OLED Model. Sales of Nintendo Switch hardware on Nintendo Store will also end in mid-February 2027. Regarding availability at retail, please check with your local retailers in the future for more information. Nintendo Switch has an extensive library of games that continues to grow, and Nintendo Switch owners can continue to enjoy all their existing Nintendo games and accessories, and Nintendo eShop, Nintendo Switch Online, and other services will all continue for the foreseeable future.MORE VIDEO GAME NEWS:Hershey Canadaannounced a collaboration withSony will shutter itsElectronic Arts was investigating an issue withlast week
